Prediction: Strong Storm Could Cause $65B in Offshore Losses

Wednesday, September 19, 2007
An extreme-risk consulting firm predicted a strong hurricane in the Gulf of Mexico could generate losses of more than $65 billion for the offshore oil and gas industry. EQECAT, a subsidiary of Oakland, Calif.-based ABSG Consulting Inc., said recently a strong Category 5 storm, with a track through the heart of the Gulf of Mexico, could produce such property damage and revenue losses. “Property damage alone could exceed $35 billion and losses due to business interruption and reduction in production capacity could add another $30 billion to the loss,” said Richard Clinton, EQECAT’s president. “Industry insured losses are more difficult to estimate due to changes in allocated insurance capacity, policy terms and limits following the large losses from 2004 and 2005 hurricanes, but certainly could be in the $15 billion range.” EQECAT based the findings on running a new offshore energy model it produced. The model has the ability to quantify the risk of disruption of product delivery to onshore facilities due to pipeline damage, reductions in production and infrastructure damage. The model can be found at

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